South Africans got poorer, but alcohol consumption increased, UCT analysis finds
As Treasury weighs higher alcohol taxes, new research challenges the industry's claim that the illicit market grew by 55% - and the numbers don't add up.
South Africans experienced a decline in wealth between 2017 and 2024, yet alcohol consumption grew, according to a University of Cape Town (UCT) analysis. Economist Corné van Walbeek, director of UCT's Research Unit on the Economics of Excisable Products, found that tax-paid alcohol consumption rose by 24.2% over the seven-year period.
Despite the population growing by 14.7%, per-capita consumption of tax-paid alcohol increased by 8.3%. However, the country's overall economic well-being fell, with GDP per-capita declining by 4.7% and household disposable income per-capita dropping by 1.5%. Van Walbeek highlighted that real alcohol excise taxes grew by 10% to 13%, while the real price of alcohol remained stable.
This situation contradicts the alcohol industry's claims that illicit alcohol consumption surged by 55% during the same timeframe. The industry's claim is based on a 2025 Euromonitor International report, which relies on legal alcohol data and surveys of 707 consumers. Van Walbeek argued that these sources are insufficient to establish the size or growth of the illicit alcohol market.
He noted that legal alcohol consumption actually increased by about 10% after accounting for population growth. When comparing alcohol to cigarettes, Van Walbeek observed a clearer shift towards illicit products for cigarettes, while the data showed a more balanced relationship between legal and illicit alcohol sales. The Drinks Federation of South Africa estimates the illicit alcohol market grew from 498,290 hectolitres in 2017 to 773,424 hectolitres in 2024, a 55% increase.
The industry argues that higher excise taxes might exacerbate the problem, potentially increasing illicit alcohol consumption and reducing government revenue. Alcohol harm-reduction campaigners assert that alcohol-related harm costs around R800 billion annually, primarily affecting lower-income groups. South African Breweries suggests linking annual excise tax increases to inflation, while the brewer warns that setting a larger price gap between legal and illicit alcohol could encourage illicit consumption.
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